We’re often asked by clients to explain what a deadline sale is — it seems to cause a whirlwind of confusion! So we want to put that misunderstanding to bed once and for all.
Why do you need to know?
When selling a property, it’s crucial to be aware of all the possible sale methods. Each varying approach can offer unique benefits for your sale.
Only by becoming familiar with all of them can you pick the right one and achieve the best price for your property!
Two main ways of selling
Essentially, there are two basic methods by which someone can sell their home:
- With an advertised price
- Without an advertised price
Now, most people will be familiar with the “advertised price” sale strategies — they’re the “traditional” way of selling.
The “without a price” methods include auction, price by negotiation, deadline sale and tender. These options are seeing a surge in popularity, particularly here in Dunedin. They offer many benefits and one of these — the deadline sale — is fast becoming one of the most effective ways of selling property.
Our basic definition
In simple terms, the “deadline” of a deadline sale is the date the property will be under offer or — even better — sold by! The property goes on the market about a month prior to this — without a guide or reserve price. In this time, interested buyers submit confidential written offers. The seller chooses to accept or reject any of these on the deadline date or if they have advertised as ‘prior offers considered’ they can even accept before this date.
Let’s go into a little more detail
We run deadline sales over a 3-4 week marketing campaign. We’ve found this to be the most effective timeframe because it’s the period that naturally generates the most interest in a property. With deadline sales, you capitalise on this by creating a strong marketing campaign that coincides with the “new listing” surge of attention!
First of all, you have to decide whether or not you’ll consider prior offers. If you don’t want to, you will just weigh up all the offers on the deadline day. But if you choose to accept prior offers, buyers can submit them at any time — they’re placed in envelopes and are entirely confidential. As consultants, we are legally bound to present all offers in writing and you can choose to accept one at any time.
If there is a lot of interest, you can bring your deadline forward and hopefully create a multiple offer situation (more on this in our next blog!).
A great advantage of this method of sale is that the value of your property is completely open to interpretation. This can result in very high offers!
The deadline, confidentiality and absence of guide price come together to put pressure on buyers to act swiftly. This gives you the best chance of getting a “King Hit” (that’s real estate lingo for fab top offer!) before the deadline.
Deadline sales use the standard sale and purchase agreement — the most common contract template in New Zealand. (As opposed to the tender process, which uses specific tender documents). The standard template means buyers are likely to understand and trust the process. But the benefit is that it’s not rigid! Clauses are open to negotiation, which can help to attract buyers if they have specific terms.
There are some drawbacks to think about
Auctions are more effective at tapping into the impulsive, competitive nature of people which can give strong sales results. And nervous buyers can be hesitant to place an offer in case they’re way over or under what you were expecting — methods with a guide or reserve give them a greater sense of security.
As well as this, it can be difficult for you to decide which offer to accept. With an auction, that decision is taken off your hands — the highest bidder wins as long as they reach or exceed the reserve. However, in the deadline sale process you may have to weigh up offers with differing conditions or requests to the contract. If you’ve received high offers this is a good dilemma! But it’s a serious consideration nonetheless.
At a glance:
- A 3-4 week campaign
- The deadline is a set day on which the seller announces their decision
- Prior offers can be considered and accepted
- Conditional offers can be accepted — for instance, buyers may need to secure finance or carry out a building report
- There is no cap, reserve or advertised price
- Offers are confidential
- A standard sale and purchase agreement
- You can receive excellent offers due to confidentiality and the absence of guide and reserve prices
- You can sell quickly due to the short campaign timeframe
- You can choose to accept early offers or wait until your deadline: the ball is in your court
- You can set a preferred possession date
- Buyers are reassured that you are serious about selling
- Conditional offers expand your buyer pool
- You don’t benefit from emotion or impulse like with auctions
- Hesitant buyers can be put off by the absence of a guide price
- The inclusion of conditional offers presents the risk that your accepted offer may fall through
So there you have it — our one-blog-guide to the deadline sale!
In our experience, we’ve seen excellent results with this type of sale. You have the potential to quickly achieve a really great price!
However, it all depends on the type of property you’re selling. We’d always recommend getting a professional’s opinion: your local agent can take the time to understand your unique position. They will be able to share insight into your current market and price bracket. And, most importantly, they can give tailored advice as to which sale method would be most effective for you!
Have you sold by deadline sale? What did you think of the process? Let us know on Facebook!
We’re part of the team at Harcourts Dunedin.